III. Metro-Goldwyn-Mayer v. Grokster cont'd.

B. Vicarious Copyright Infringement

Three elements must also be shown to succeed on a theory of vicarious infringement: (1) direct infringement by a primary party, (2) a direct financial benefit to the defendant, and (3) the right and ability to supervise the infringers. As with the contributory infringement theory, direct infringement was not an issue, and the Court found a financial benefit through the paid advertising. That left the issue of the right and ability to supervise the infringers.

In the Napster cases, the Ninth Circuit found the defendant reserved the right to block access to its index for any reason. This control of the central indexing file, together with the requirements that users register with Napster to access the index and thus to download anything, gave Napster the right and ability to supervise direct infringers.

The defendants here have no such right or ability said the Court. There is no registration and log-in process as with Napster and no point of access common to all users. The plaintiffs had argued to the Court that defendants could control the direct infringers by ceasing distribution of their software. The Court concluded that cessation of distribution would be a remedy if vicarious infringement existed, but the mere distribution was not enough to establish control and thus prove the ability to supervise.

After the Ninth Circuit affirmed, the Supreme Court granted the petition for review.

IV. Predictions On The Result In The Supreme Court

Oral argument in the case was held on March 29, 2005. We cannot expect a decision by the Court for at least several weeks, and more likely, several months. Predicting the outcome of cases in the Supreme Court is most often perilous at best, but some of the Ninth Circuit's reasoning is questionable. I believe the Supreme Court will reverse the Ninth Circuit and the case will wind up in the District Court for further proceedings. It is important to note that if the Court does indeed reverse, that does not mean the plaintiffs have won. It will simply mean that the summary judgment will be vacated and the case will proceed, perhaps to trial.

"From the beginning, the law of copyright has developed in response to significant changes in technology." [15] In its heavy reliance on Betamax, the Ninth Circuit failed to account fully for the radical differences in the technology at issue. Sharing videotaped television in the early 1980s differs markedly from sharing copyrighted material via the internet, both in terms of the ease of downloading for the individual and the number of people to whom a single pirated copy of music or movie can be distributed. The Court's reliance on the specific holding that Sony was not liable in Betamax came at the expense of only a cursory analysis of the reasoning in Betamax.

Fig. 2: US Supreme Court

Notably, a Seventh Circuit case reached a different conclusion than the Ninth Circuit. The case was In re Aimster Copyright Litig. [16] While the Ninth Circuit rejected the concept of "willful blindness" as a basis to impute knowledge, Aimster held that a defendant could not protect against liability by purposely avoiding knowledge. Aimster also concluded that the Supreme Court in Betamax was concerned not only with possible noninfringing uses, but also the probability that the product would, in fact, be used primarily for noninfringing purposes. The Ninth Circuit's position on that issue would require actual specific knowledge whenever a legitimate use could be stated regardless of how unlikely such use might be.

The Supreme Court denied a petition for certiorari (i.e., refused to review) in Aimster. While technically no conclusion as to the Court's position is to be drawn from the denial, one of the primary grounds on which it reviews a case is a misapplication of its precedent by a Court of Appeals. Although far from conclusive, the denial in Aimster and the granting of the petition here may provide some clue as to the Court's thinking.